ECON 103 Lecture Notes - Lecture 5: Market Price, Economic Surplus, Marginal Cost
19 Oct 2017
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Scarce resources might be allocated by: market price. People who are willing to pay the market price get the resource. Sell labour service in a market + buy what you consume in markets: command. Allocates resources by the order of someone in authority. Ex. in a job, someone tells you what to do = labour time is allocated to speci c tasks by command. Good in organizations, bad in entire economy: majority rule. Works when decision affects lots of people & self-interest must be suppressed: contest. Ex. sporting events but they occur in other arenas / performance reviews at jobs: first-come, rst-served. Ex. casual restaurants/supermarkets (1 person at a time in a sequence) Allocate to those w/ winning numbers/drawing lucky cards/come up lucky on a gaming system. Provincial lotteries, casinos, taxi cabs (100 licenses but 1000 want to drive one) To distinguish among potential users of a scarce resources: personal characteristics. Allocate resources to those with the right characteristics.
